Banking Operations and Services
ITEM 5: Bank Accounts and Operations
Debit and Credit Transactions
Debit transactions: These involve raising funds from customers and represent the main source of funding for banks. They are derived from the bank’s debt obligations, such as loans, credit, and bank guarantees.
Active operations: These consist of granting sums of money and represent a collection right for the bank against customers. Examples include current accounts, savings accounts, and time deposits.
Service Operations: These are additional benefits linked to active and passive operations.
Account Opening Process
The account opening process typically involves the following steps: application, registration of firms, due diligence, initial deposit, and delivery of documentation.
Types of Accounts
Individual Accounts
These are issued in the name of a single person, who is the sole owner of the account.
Joint Accounts
These are open in the name of two or more persons, who can access the funds independently or jointly, depending on the account type.
- Indistinct Joint Account: Each account holder can operate the account independently with their own signature.
- Joint Account with Multiple Signatures: All account holders’ signatures are required to access funds.
Account Cancellation or Closure
Account cancellation or closure signifies the termination of the relationship between the bank and the customer.
Checking Account
Checking in sight: This account type is characterized by the immediate availability of funds without prior notice.
Cheque
Cheque: A document containing an unconditional order from the drawer to a bank, payable at sight to its legitimate holder for a specific amount of money.
Types of Cheques
- Bearer Cheque: Payable to the person presenting the cheque, indicated by the phrase “Payable to Bearer.”
- Nominative Cheque: Issued in the name of a specific individual or legal entity, who must present identification to cash the cheque.
- Cheque for Deposit into Account: The drawer prohibits payment in cash, requiring the cheque to be deposited into the payee’s account.
- Crossed Cheque: Marked with two parallel transverse lines, indicating that it must be deposited into an account and cannot be cashed.
- Certified Cheque: The bank guarantees payment by certifying the cheque.
- Window Cheque: Issued by the bank itself at the customer’s request, typically when the customer does not have their chequebook.
Savings Account
Savings Account to see: Characterized by the immediate availability of funds and a slightly higher interest rate than a checking account.
Fixed-Term Deposit
Fixed-term deposit: A deposit of money that is not available until the agreed-upon maturity date. It offers a higher interest rate than savings accounts.
Certificate of Deposit
Certificate of Deposit: A fixed-term deposit formalized in receipts, which can be transferred by endorsement at any time.
ITEM 6: Loans and Credit Facilities
Discount Shopping
Discount shopping: An active operation where a bank advances the amount of commercial bills, less interest, commissions, and other costs.
Management Fee
Management fee: Applies when there is no urgent need for liquidity, and the bill is held until maturity. The bank provides a collection service.
Bank Loan
Bank loan: The delivery of a certain amount of money from the bank (lender) to a customer (borrower), who promises to repay the amount plus interest at the agreed-upon time and manner.
Mortgage Loan
Mortgage Loan: Granted against a mortgage on real estate property owned by the customer.
Personal Loan
Personal Loan: A loan secured by a mortgage on real estate property owned by the customer.
Credit Account
Credit Account: The granting of a credit line up to a specified limit and for an agreed-upon period.
Overdraft
Discovery: An exceptional and temporary negative balance in a checking or savings account.
Bank Guarantee
Bank guarantee: A contract where the bank guarantees the fulfillment of commitments made to third parties by the customer requesting the guarantee.
ITEM 7: Payment Methods and Other Services
Credit Cards
Credit cards: Payment methods that allow the holder to purchase goods or services at establishments affiliated with the card payment system.
Debit Card
Debit Card: Allows cardholders to withdraw funds and use other ATM services. Sufficient funds must be available in the associated account.
Credit Card Payment Methods
Credit Card: Deferred payment methods linked to a bank account, allowing purchases and cash withdrawals even without sufficient balance in the account.
Reimbursement Arrangements
- Full payment: Repayment of the entire amount withdrawn in the previous month.
- Deferred percentage: Payment of an agreed-upon percentage of the outstanding balance.
- Fixed monthly amount: A fixed minimum and maximum payment amount is agreed upon.
Debit Collections
Debits collection: Authorizations from the client to the bank to make specific payments from the customer’s account.
Transfer
Transfer: The movement of funds from one account to another.
Internal Transfer
Transfer: The transfer of money between accounts belonging to the same owner and held at the same bank.
Payment Order
Order of payment: A transfer where the payer makes the payment in cash rather than through a direct debit.
Cash Payment Order
Order of payment: Cash delivery to the beneficiary, either by payment in cash or by debiting the payer’s account.
Management of Commercial Paper Collection
Gestion collection of commercial paper: The process of collecting commercial bills delivered by customers to the bank for payment.
Safe Deposit Box
Safe: Secure boxes, usually armored, provided by banks for customers to store valuables.
Permanent Mailbox
Permanent mailbox: Mailboxes located near ATMs, allowing customers to deposit money securely at any time.
Traveler’s Cheques
Traveler’s checks: Cheques that can be used in other countries and exchanged for the desired currency.
Difference Between Discount and Collection
Discount Difference and collections: Discounting involves advancing the amount of a bill, less interest and fees, while collection only involves managing the collection process.
Difference Between Savings Account and Fixed-Term Deposits
Difference between savings account and fixed term deposits: Fixed-term deposits offer higher interest rates than savings accounts, but the funds are not available until maturity. Savings accounts offer greater liquidity.
Active and Passive Operations
Active operations represent assets and rights for banks, while passive operations represent liabilities. Examples of active operations include loans and credit, while examples of passive operations include current accounts and savings accounts.
Banking Terms
- Position: A charge for a particular service.
- Payment: A credit entry in an account.
- Imposition: A cash deposit made by the account holder to be credited to their account.
- Withdrawals: Withdrawals of cash or by cheque.
- Red Numbers: Indicates that the client owes a certain amount to the bank.